Saturday, July 20, 2013

Raising Entrepreneurial Children: Folklore and Fact

A Wall Street Journal article offers some advice for
parents who want their children to become entrepreneurs, and who are wondering
how to raise them. Advice on raising children is not frequent in the Wall
Street Journal, so it caught my attention. The advisors are Arthur Blank,
co-founder of Home Depot, Pierre Omidyar, founder of eBay, and Jim Koch,
founder of Boston Beers. All are very successful entrepreneurs. Let's take a
look at how they fare as child-raising advisors.

The full list of advice is to make the children,
adventurous, dependable and stable, observant, and team players. Not all of those can be validated by evidence, but team player can be, so let's focus on that one. The advice is to
get children involved in team sports at an early age order to instill the values
and lessons from winning and losing, as well as that of working together as a
team. OK, this sounds intuitive. But many intuitive ideas are wrong, and we
know that this advice comes from entrepreneurs who draw from their own
experience, as well as observation from others. But of course their own
experience is much more powerful. So, if we view the background of their advice
scientifically, it is based on a small number of observations, and they weight
one (their own upbringing and venture) much more heavily than others. Any
social scientist would say that it would take luck for them to be right in
their advice.

Were they lucky? I
currently do research with Marc-David Seidel and Dennis Ma that answers the question. We have data on what
activities youth were engaged in at early ages (10-11 years) as well as later
on (15), including sports. We can distinguish team sports and sports without a
team structure. The distinction is interesting because sports offer different
experiences: risk taking, winning and losing, working together as a team,
taking instructions from a coach. We were interested in team sports because our
intuition was the opposite of that of the entrepreneurs: Because team sports
involve coaching, they are mini organizations that may prepare children better
for employment than for entrepreneurship.

The evidence was interesting. Involving children in
team sports early reduces their wish
to become entrepreneurs. As we expected, it makes them comfortable working with
others, which is what they would do in a job, as a paid employee. The
entrepreneur, at least initially, needs to be comfortable working alone. But
children who were involved in team sports at the age of 15 were more likely to
aspire to entrepreneurship. We suspect that the age difference has to do with
the shift in decision making between 10 and 15: the youth who is involved in
team sports at age 15 has probably decided to do so on his or her own, so it is
a result of some personal characteristics related to entrepreneurship. The child who does team sports at the age of 10 is probably put there by the parents. When
tracing these children forward to adulthood we found that in the early 20's, those
who were involved in team sports at ages 10-11 had no more or less
entrepreneurial income than others, but those involved in sports at age 15 had more
entrepreneurial income (barely measureable, but enough to prove a relation).
And what about non-team sports at age 10-11? No relation to entrepreneurship.

I don’t usually give advice on how to raise
children, but I can summarize the evidence. Getting your child into a sports
team at an early age puts him or her on path to become an employee. Letting children do
some non-team sport (skateboarding, anyone?) has no effect. Make your own call
on whether you want your child to become an entrepreneur, please, but this is
what to do or not to do.